Religare Projects 47% Upside for Reliance Industries Amid Jio IPO

Religare Broking has projected that the upcoming listing of Jio Platforms could lead to a substantial re-evaluation of Reliance Industries Limited (RIL). The brokerage has set a target price of Rs 1,696 for RIL, indicating a potential upside of 46.7% from its recent closing price of Rs 1,156 on October 12. Currently, the stock is trading at Rs 1,175, and analysts believe that the listing will provide a clearer market valuation for Jio, which is RIL's most significant growth asset.

Historically, conglomerates like Reliance have faced challenges in achieving fair valuations due to a lack of transparency in their individual business segments. The anticipated IPO of Jio is expected to address these issues by providing an independent market price for the company, which could help narrow the holding-company discount that often affects conglomerate valuations. This clarity is crucial as it may lead to a re-rating of RIL's stock, enhancing investor confidence.

According to Religare, investors are encouraged to buy RIL shares ahead of Jio's market debut, as institutional investors typically factor in major corporate developments before they occur. The brokerage notes that the recent price correction of RIL shares has removed previous valuation premiums, making it an opportune time for investors to enter the market. With Jio's expected listing, investors can benefit from both Jio's value discovery and the performance of RIL's other business segments, including Reliance Retail and the oil-to-chemicals sector.

Jio's transition from a capital-intensive telecom rollout to a monetization phase is another critical aspect of this investment case. The company has been focusing on increasing its average revenue per user (ARPU) and expanding its 5G services. Jio's operational revenue for FY26 was reported at Rs 1,46,885 crore, with a net profit of Rs 30,049 crore. The IPO proceeds are expected to improve Jio's balance sheet by reducing outstanding debts, which would enhance net profit margins and free cash flow.

Looking ahead, Religare has outlined a three-phase timeline for the expected re-rating of RIL. In the short term, the filing of Jio's IPO draft is anticipated to establish a transparent valuation floor for RIL. Over the medium term, improvements in Jio's ARPU and debt management could lead to significant EBITDA growth. In the long term, the expansion of Reliance Retail and new energy initiatives may trigger further valuation increases. Religare maintains its BUY recommendation for RIL, emphasizing the potential for substantial gains as market conditions evolve.